How to get your watch investment spot on
More and more people are investing their money in timepieces, but is it as sensible an option as you’ve been led to believe?Richard Whitehead October 28, 2015
Sold at auction last year for just over $20 million, the Henry Graves Supercomplication is the world’s most expensive second-hand watch. It was last wound in 1969 and still continues to work. Its 24 complications were the most ever built into a timepiece back in 1933, when the pocket watch, commissioned by the New York playboy financier whose name it bears, was completed by legendary swiss watchmaker Patek Philippe after eight years’ painstaking work.
For those not familiar with horology jargon, a complication is the term used to describe any feature a watch offers in addition to telling the time, and those 24 complications still hold the record today. Generally speaking, the more complications a watch has, the more expensive it is, and the greater chance it has to appreciate in value as an investment.
Graves had spent $15,000 on his timepiece. In financial terms alone, it proved to be an excellent investment. But with features like Westminster chimes, a perpetual calendar that would factor in leap years, and a celestial map of New York as seen from his apartment on Fifth Avenue, it was also a deeply personal piece, and it illustrates just how collectors will cherish their watches as the portable works of art they are. Horologists can easily go to the opera wearing a vintage watch, though an art collector wouldn’t get far carrying a portrait.
“Watches are no longer the niche investment they were 20 years ago, but they have evolved into their own worldwide investment market over the past decade,” says mark Blowers, owner of ian Blowers Jewellers, a British speciality watch dealer with a wide international reputation. This is because all the leading Swiss brands have produced very high quality timepieces over that time, with more emerging as attractive alternatives to new investors who also want to enjoy their collections.The past 10 years have also seen sizeable growth in metal and production costs in the watch industry, and over that time retail prices have sometimes doubled. Although a serious watch collector would need a sizeable discretionary income, supercomplications with million-dollar price tags are not the norm for all but the elite. It is surprising how many possibilities there are now for less than $20,000, led by Rolex.
“In the pre-owned market, Rolex has always been the bread and butter brand at the top end,” adds Blowers. “Rolex doesn’t really do complications; it just relies on basic movements produced to exceptionally high quality. Rolex sports watches in particular have been a good investment worldwide. For example, if you’d bought a good-quality Rolex Mariner 10 or 20 years ago, you might have seen your investment grow 10 times.”
At the top end of the market, Patek Philippe is the world’s leading specialist in high-quality, rare watches. Yet still, its pre-owned models with a few complications can be bought for as little as $10,000 — a Patek Philippe Calatrava from the 80s or 90s in good condition would be an excellent investment in this bracket.
Having knowledge of the product, the manufacturer, the market and the industry is crucial.
But for customers looking to invest in a brand-new, top-end model by the watchmaker, you must either be known to the company or be interviewed by them so they can decide if you are worthy to own one of their watches, some of which can take between two and four years to produce through the work of just one craftsman, such is their technical quality.
Warren Buffett, arguably the world’s greatest money-maker, once said: “Never invest in a business you don’t understand.” He could have been talking about the watch investment market. It can be the easiest thing in the world to spend $50,000 on a lovely classic timepiece and then never get your money back. That is likely to happen if you aren’t discerning with the advice you get. There are a lot of sharks in the watch business, but after speaking to reputable dealers and planning the balance of your portfolio, the right watch will bring both enjoyment and profit.
“In the UAE, for example, I can count on one hand the number of consultants I would trust; the same is the case in Switzerland and England,” says Blowers. “It is essential you take advice from people who have been in the trade for 20 to 30 years, who can draw on that experience. Knowledge of the past three decades is essential because that period will continue to be strong in the market for another 30 years. It is also always good to take recommendations from other collectors.”
Like with any other investment, having knowledge of the product, the manufacturer, the market and the industry is crucial. Only with detailed knowledge can one tell the difference between a collectible timepiece that holds high price appreciation, and another that is merely expensive.
A collector’s focus should be on watchmakers known for their craftsmanship.
Watch analyst Robert-Jan Broer says he could point his finger to almost any stainless-steel sports Rolex out there, old or new, as a sound investment. “A stainless-steel sport Rolex like a Submariner or Daytona are likely to gain in value as the annual increases are quite steep in catalogue prices, with the value on pre-owned watches increasing just as much,” he explains.
A collector’s focus should be on watchmakers that are well-known for their specific innovations or craftsmanship, like Rolex which had earlier built a reputation for engineering and design for professionals in aviation and diving. Patek Philippe, renowned for painstaking detail, and Cartier’s standing as a goldsmith, also occupy this ground.
That’s not to say the emphasis should be solely on the old brand names of horology, as contemporary watchmakers also offer an interesting prospect for collectors. Richard Mille, through its use of super-lightweight materials and advanced engineering, is one such example, though analysts have not yet worked out a reliable way to assess by how much its timepieces will appreciate.
Rarity is another important consideration, says Broer, and obviously the rarer a particular model, the more valuable it is. For example, Patek Philippe’s stainless-steel models from the 1940s and 1950s are now very lucrative because they were not popular when they were made.
Other watch investments can be linked to an event or a personality such as Albert Einstein’s gold 1929 Longines, which fetched almost $600,000 at auction. “When looking to buy a vintage watch, pay attention to its authenticity and condition,” Blowers says. “If possible get the original documentation and certificate, and ensure that the watch has been well maintained, is working well and that the original parts are still intact.”
In such a vast and specialised industry in which prices range so widely, it can be difficult to ascertain any real growth trends, especially when each model can easily act as its own market. But a prospective investor can head to an auction house to find some of the most lucrative deals on luxury timepieces.
Chrono24, which monitors the retail watch market, has been watching a growing number of smaller brands with a limited output like DeWitt, F.P. Journe, Richard Mille, “or the very interesting German brand Moritz Grossman from Glashütte, H.Moser et Cie. from Switzerland; Antoine Martin; Sarpaneva; Christophe Claret or Greubel Forsey”.
The consultancy adds: “Those are rebels compared to the usual mass-producing manufacturers and the resale prices are high because of the very limited quantity of watches in the market. And it appears that resale prices are stable – those timepieces are about great exclusivity and ingenious technology, and keep high prices also in the second hand or resale market. But it is a bit like in the venture capital business: some perform, some do not.”
A well-balanced collection, like a stock portfolio, should include a mix of contemporary and classic watches, though it is rare for watch owners to specialise in one single brand. “If you’re putting a collection together, you tend to have a few from the leading brands, weighted towards the top watchmakers,” Blowers says. “There are the ever-popular vintage watches, and sports watches from 50s and 60s, which are becoming very collectable. Rolexes in the 70s were not well received at the time, so are now worth $20,000 to $30,000, when once they could be bought for only a couple of hundred dollars.”
A watch’s movement represents more in investment terms than the value of the metal or the stones in the case. Those with most complications will see the timepiece’s value grow far faster than the market price for commodities like gold or diamonds. But once again, it all comes down to the advice you receive. According to Blowers, there are some fine retailers across the Middle East, not least in Dubai. “There are wonderful Patek Philippe stores, as well as all the other fine brands there. You’d never be short of choice, it’s just the advice that’s harder to be sure of.
“Whatever you buy, look after it and the investment side will look after itself in only a few years. Watches are a joy to own, especially when you can see your investment grow.”